somaliland exit, page-7

Kind of agree kastin. In think the writing was on the wall, when they intially wanted $5m and had to settle for $3.9m that risk appetite may not be that strong for JKA.

I haven't yet replied on my SPP purely because I was expecting an announcement around asset sales as the CR would not have given them enough cash for their work programme and I wanted to see what asset they would be looking at divesting. Bargou, could have lived with that, Somaliland, can live with that, OML113 is non-negotiable for me and should never have been considered for sale.

Pleased to see that its Somaliland (certainly for the short term) as IMO there is currently very little (if anything) in the share price for Somaliland and with their current assets they can easily support a share price of greater than $25-26m (based on 6.5c) and hence the SPP comes back into play where previously I was seriously undecided as to what to do.

My back of an envelope calcs:

Cash = $13m
Aje (Cenomanian - 2C to be converted to 2C shortly) = $4m (1.3m barrels at circa $3 / barrel undeveloped)
Aje (remainder at $1.50 / barrel) = $14m
HW3 (2C of 5.7m barrels at $1.50 / barrel) = $8.5m

All up that provides a market cap of circa close to $40m or around 10c / share. To get to a market cap of $25-26m you'd be applying a serius discount to these values, even assuming the Aje Cenomanian isn't yet at FID and we haven't yet booked 2P the take $3m away, but the value at $1.50 / barrel (decent price to sell at) suggests a significant increase to the market cap.

Even assuming $1 / barrel for each 2C resource you would get a market cap of $29m. Assuming we open at 6.5c so around the $25-26m market cap, then this would value each 2C resource for both Aje and HW3 at about 80c / barrel which is way way too low for their asset base, hence the reason why with the extra cash, the SPP is now looking attractive on a value basis whilst providing significant financial flexibility going forward.

I will be taking my full allocation, just considering whether I want to go for any shortfall.